eu electricity
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quarterly report on european electricity marketTRANSCRIPT
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• MARKET OBSERVATORY FOR ENERGY
VOLUME 3, ISSUE 2: APRIL 2010 – JUNE 2010
QuarterlyReport onEuropeanElectricity
Markets
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EUROPEAN COMMISSION
Günther H. Oettinger
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HIGHLIGHTS
• Following the usual seasonal patterns the gross inland electricity consumption in Q22010 decreased on EU-27 level compared to the first quarter of the year, however, itexceeded the quarterly power consumption of the second quarter of 2009 which wasthe deepest period of the economic crisis.
• The beginning of the second quarter of the year corresponds with the period ofmaintenance works of power plants (planned outages) on many EU markets thatexerted apparent impacts on the evolution of electricity prices.
• After having experienced unusual conditions on the Nordic market in the first monthsof 2010 the second quarter could be characterized as a period of returning to normalmarket functioning. Both prices and traded volumes were significantly lower thanthose of the first quarter, returning to levels typical for this period of the year. As aconsequence of the lower price levels the region became net power exporter again inQ2 2010.
• Wholesale electricity prices generally moved upwards in the second quarter of 2010on most of the observed markets, helped by constant rise of coal and gas prices and
colder-than-usual weather conditions in April and May 2010 in many EU countries.However, on some markets where the weather was milder and the situation of theeconomy weighed on power demand, price decreases could be observed.
• Forward prices of fuels continued rising in Q2 2010. The 2011 forward prices for baseload power increased as well, however in May a drop took place due to the fearsof a new economic downturn.
• The focus on topic deals with the steam coal markets including the structure of EU
steam coal imports. Steam coal's importance is particularly high in power production.
NEW FEATURES IN THIS REPORT
• Introduction of the Estonian price area in Nord Pool Power Exchange.
• Introduction of a map showing the amount of commercial electricity flows in thesecond quarter of 2010 across EU Member States, highlighting net power exporter and
importer countries.
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DisclaimerThis report prepared by the Market Observatory for Energy of the European Commission aims at enhancing public access toinformation about electricity prices within the Members States of the European Union. Our goal is to keep this information timelyand accurate. If errors are brought to our attention, we will try to correct them. However the Commission accepts noresponsibility or liability whatsoever with regard to the information contained in this publication.Copyright noticeReproduction is authorised provided the source is acknowledged.© European Commission, Directorate-General for Energy, Market Observatory for Energy, 2010
QUARTERLY REPORT
ON
EUROPEAN ELECTRICITY MARKETS
CONTENTS Page
A. Recent developments in electricity
markets across Europe 1
A.1 Wholesale markets 3
A.1.1 Day-ahead 4EU wholesale markets 4Regional markets 5
Central Western Europe 5Northern Europe 12
Apennine Peninsula 14Iberian Peninsula 16
Central Eastern Europe 17British isles 20South Eastern Europe 21
A.1.2 Forward markets 24
A.2 Retail markets 27
A.2.1 Prices by Member state 27
A.2.2 Cross-panel data on household
electricity prices28
B. Building the internal market forelectricity : cross border flows and trade 29
C. " Focus on steam coal" 32
A. Recent developments in the
electricity markets across Europe
In the second quarter of 2010 the evolution
of the monthly electricity consumption inthe EU-27 followed the usual seasonal
pattern of the preceding years. The averagemonthly consumption was below 250 TWhduring quarter Q2 2010 and at the
beginning of the summer in June as theheating period was over it dropped to thelowest value (239 TWh) observed in 2010so far, more than 25% off its record highmeasured in January 2010.
In the second quarter of 2010 the quarterlygross electricity consumption was 732.4TWh which is the second lowest seasonal(Q2) consumption value in the last eightyears; showing a modest rise (2.7%) fromits trough measured in the second quarterof 2009. The extent of the change in
Source : Eurostat
Monthly consumption for Italy, Greece and Malta (June 2010) is
estimated based on GDP data for the second quarter of 2010
from Eurostat's Principal European Economic Indicators.
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quarterly gross consumption compared toQ2 2009 varied among different powermarket regions: in the Baltic region only amodest (1%) increase could be observedwhile in the Central and Eastern EuropeanRegion (CEE) consumption showed a jumpof 6.4%.
This latter must have been in conjunctionwith the relatively good economic
performance measured as the growth of thequarterly GDP (compared to Q2 of 2009)and the significantly colder weather in thecountries of this region. In contrast, boththe Apennine Peninsula and the BritishIsles regions showed a slight contraction intheir electricity consumption (-1.9% and -0.5%, respectively).
The European economy showed solid signsof recovery in the second quarter of theyear; having grown by 1% compared to thefirst quarter of 2010 and by 2.2%
compared to Q2 of 2009. With theexception of six Member States (MSs) EUcountries have already come out of the
recession that also contributed to higherdemand for electricity.
Among the economic sectors heavily relyon energy consumption the manufacturingindustry posted an 8.2% growth in grossvalue added while the industry as a wholeincreased by 6.5% compared to the secondquarter of 2009. In contrast, theconstruction sector showed a slight
contraction (-0.9%)
According to the Eurostat/JRC data onheating degree days (HDD)1, April 2010 inthe EU-27 as a whole was a milder monththan usual (about 14% less HDDs than thelong-term average)
Although May 2010 HDD values did notshow any significant deviation from thenormal seasonal temperature, in some
countries, notably in the Central WesternEurope Region HDDs were significantly
1 Heating degree days (HDDs) express the severityof a meteorological condition for a given area andin a specific time period. HDDs are defined relativeto the outdoor temperature and to what isconsidered as comfortable room temperature. Thecolder is the weather, the higher is the number ofHDDs. The 'long term average' is the average HDDvalue for the years between 1980 and 2004. Thesequantitative indices are designed to reflect thedemand for energy needed to heat a building.Cooling degree days (CDDs) are defined in asimilar manner.
Source : Eurostat.
Selected Principal European Economic Indicators* Gross domestic product (GDP) at market prices is the final
result of the production activity of resident producer units. It is
defined as the value of all goods and services produced less the
value of any goods or services used in their creation. Data are
calculated as chain-linked volumes (i.e. data at previous year's
prices, linked over the years via appropriate growth rates).
Growth rates with respect to the same quarter of the previous year
(Q/Q-4) are calculated from raw data.
EU 27 Heating Degree Days in Q2 2010Values for 2008, 2009, 2010 and 1980 – 2004
average April May June 2008 270.34 133.90 56.89 2009 238.64 123.95 67.55 2010 248.26 153.20 58.24 LT avg. 289.25 154.04 66.55
Source : Eurostat / JRC
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higher in May, meaning a colder weatherthat exerted influence on power prices.
A.1 Wholesale markets
In the second quarter of 2010 the priceevolution of oil, natural gas and coalshowed signs of divergence.
Brent crude oil spot prices were relatively
stable during this period, the daily average prices fluctuated within a narrow band of €55-65/bbl. This relative stability was theconsequence of the simultaneousweakening of the Brent crude measured inUSD (from 80.3 $/bbl measured on the 1st April to $ 72.1/bbl on 30th June) as theglobal economic outlook became lessfavourable and the depreciation of theEUR against the USD (1.34 $/€ on 1st April vs. 1.23 $/€ on 30th June), reflecting
the euro-zone's financial stability concerns.
0 €
20 €
40 €
60 €
80 €
100 €
120 €
140 €
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
25 €/MWh
30 €/MWh
35 €/MWh
1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6
2007 2008 2009 2010
Brent crude spot (€/bbl) Coal CIF ARA (€/mt)
NBP Spot (€/MWh)
Average monthly spot prices of selected energy commodities.Left scale : Oil (Brent, €/bbl) and Coal (CIF ARA, €/metr ic tonne) ;
Right scale : Gas (UK NBP, €/MWh)
Source : Platts.
In contrast, both natural gas and coal pricessoared during the second quarter of 2010.UK National Balancing Point (NBP)monthly average spot hub prices showed a43% increase between March and June2010 and the price increase of other major
European hubs was also in a 40-60%range. The average June monthly pricelevel of the UK's NBP hub (€ 17.3/MWh)was the highest since February 2009. Thisunusually strong upward movement in gas
prices might have been in strong relationwith the relatively cold weather in Apriland May. NBP hub prices were alsoaffected by fall-outs of Norwegianshipments during this period.
Similarly to gas, coal CIF ARA monthlyaverage prices2 rose significantly betweenMarch and June 2010 (from € 53.2/Mt to €76.3/Mt, meaning a more than 43%increase and the highest monthly valuesince October 2008). This price increasewas mainly due to the strong demand fromAsia and increasing freight trade as well asto the impact of replenishing inventories inthe wake of an increasing economic
activity.
2 Price for a metric tonne of coal (calorific value of6 000 kcal / kg) delivered at the Amsterdam-Rotterdam-Antwerp area with cost, insurance andfreight covered.
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A.1.1 Day-ahead
EU wholesale markets
The monthly average of Platts PanEuropean price index showed a minorincrease during the second quarter of 2010(up from € 39.6/MWh measured in Marchto € 45.9/MWh in June).
0 €/MWh
10 €/MWh
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30 €/MWh
40 €/MWh
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60 €/MWh
70 €/MWh
80 €/MWh
90 €/MWh
100 €/MWh
50 TWh
60 TWh
70 TWh
80 TWh
90 TWh
100 TWh
110 TWh
4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 1 01 112 1 2 3 4 5 6
2007 2008 2009 2 010
Tota l vo lume - se lected pla t for Pla tts PEP
Monthly Pan European Price index (Platts) andMonthly Aggregate Volumes (selected electricity markets)
Source : Platts (price index) and selected European electricity
wholesale markets (volumes). The selected markets are : Nordpool Spot A. S ;
Eur opean Energy Exchange (EEX) ;Amst er damPower Exchange ( APX Power NL) ;
Powernext Day- ahead S. A. ;Bel pex Spot ;
Energy Exchange Aust r i a ( EXAA) ;Gest or e del Mer cat o El et t r i co ( I PEX) ;
Mercado de El ect r i ci dad ( OMEL) ;
Operat or t r hu s el ekt r nou ( OTE) ; Towar owa Gi el da Energi i S. A. ( Pol PX) ;
APX Power UK ;Oper at ul Pi et ei de Ener gi e El ect r i ca di n
Romani a ( OPCOM) ;
Hellenic
Transmission System Operator
Compared to the second quarter of 2009,marking the deepest period of theeconomic crisis and the lowest monthly
pan-European electricity prices, the
quarterly price index was up by 24.1% inQ2 2010 (as measured as the ratio ofmonthly traded-volume weighted average
prices of the Q2 period of the twoconsecutive years).
The average monthly traded volume inselected countries3 was 86 TWh in thesecond quarter of 2010, which was 12%less than in the first quarter of the year,mainly due to seasonal features and thereduction of traded volumes on Nordpoolmarket (see comments on page 11).
Nevertheless, it was 7% higher than in Q22009; reflecting the improving conditionsof the European economy and colderweather than in the same quarter of 2009.
Although monthly average prices showedan upward trend on most of the marketsduring this quarter, in some countries (e.g.:Romania, see page 20) prices were lowerat the end of the second quarter than inMarch 2010.
The quarterly traded-volume data followedthe usual seasonal pattern in most cases(decrease compared to the first quarter of2010) as the heating season has ended andmilder weather entailed lower heatingdemand for electricity.
3 The Quarterly Report intends to cover all MemberStates, Candidate countries and countries from theEuropean Economic Area that have developed afunctioning wholesale market for electricity. Forthe time being, the selected countries are: Austria(AT), Belgium (BE), the Czech Republic (CZ),Denmark (DK), Estonia (EE), Finland (FI), France(FR), Germany (DE), Greece (GR), Italy (IT), the Netherlands (NL), Poland (PL), Portugal (PT),Romania (RO), Spain (ES), Sweden (SE), theUnited Kingdom (UK) and Norway (NO).
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Regional markets
Central Western Europe
Germany
In the second quarter of 2010 tradedvolumes of electricity remained close totheir historical high values set in the firstquarter of the year, although monthly
volumes showed a gradual decreasefollowing the seasonal pattern. Themonthly average traded day-ahead spotvolume of the EPEX German/Austrian areawas 16.7 TWh in the second quarter of2010, slightly higher than the respectivevalue of Q1 of 2010 (16.3 TWh).
0 €/MWh
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120 €/MWh
0 TWh
2 TWh
4 TWh
6 TWh
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10 TWh
12 TWh
14 TWh
16 TWh
18 TWh
4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6
2007 2008 2009 2010
EPEX DE - Vo lume EPEX DE base pr ice EPEX DE peak pr ice
EPEX spot : DEMonthly volumes and prices
Source : Platts.
This can be deemed to be a significantvalue (about 35% of the combinedGerman/Austrian average monthly grosselectricity consumption - 48 TWh).
German day-ahead base-load spot pricesshowed a gradual increase during thesecond quarter of 2010; rising from amonthly average value of € 39.2/MWhmeasured in March to that of € 43.4/MWhin June. Peak-load prices showed a fasterincrease, gaining € 7/MWh (from 44 to 51)in the same period.
At the beginning of the second quarter of2010 some plant maintenance works wereundertaken (planned outages) that madethe grid tighter and exerted an upward
pressure on prices.
The weather conditions were also animportant price driving factor throughinfluencing the residential heating demand.
While in April the weather in Germanywas slightly milder than the long termaverage, in May it turned colder and therespective HDD value was 48% higherthan the long term average for this period.
Peak-load prices were predominantlyaffected by changes in wind power supply;in quarter Q2 the number of forecasts4 ofthe daily wind power supply decreasesoutnumbered those of wind power supply
increases; pushing the electricity priceshigher. This might also have contributed tothe widening spread between peak-loadand base-load prices.
German clean dark spreads5 showed a highdegree of volatility during the secondquarter of 2010. During some short periodsclean dark spreads even turned to negative,implying the non-profitability of power
productions in these periods. The low
values of the spreads were mainly due tothe fact that German power prices did not
4 Source: Platts Daily Electricity Reports5 Dark spreads are reported as indicative pricesgiving the average difference between the cost ofcoal delivered ex-ship and the power price. Assuch, they do not include operation, maintenance ortransport costs. Spreads are defined for a coal-fired plant with 35 % efficiency.Dark spreads are given for UK and Germany, withthe coal and power reference price as reported by Platts.Clean dark spreads are defined as the averagedifference between the price of coal and carbonemission, and the equivalent price of electricity.
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follow the fast increase in coal prices in thesecond quarter of the year. Changes inwind power output also exerted influenceon clean dark spread volatility; in mid-Maywhen wind power output was low spreadvalues reached a local maximum (€4.9/MWh).
-2 €/MWh
-1 €/MWh
0 €/MWh
1 €/MWh
2 €/MWh
3 €/MWh
4 €/MWh
5 €/MWh
6 €/MWh
7 €/MWh
8 €/MWh
01/Apr 12/Apr 19/Apr 26/Apr04/May11/May 18/May25/May 02/Jun 09/Jun 16/Jun 23/Jun 30/Jun
DE Clean Dark UK Clean Dark
Evolution of the Month Ahead clean dark spreads (35%efficiency)during Q2 2010
UK values are quoted in € using the €/£ daily exchange rate as
reported by Platts
Source : Platts.
Although in the second quarter of 2010market conditions of selling powergenerated from pellets and wood waste
became more favourable as it is shown onthe next graph, biomass spreads
6
6 Biomass spreads are indicative values giving theaverage difference between (1) the combined priceof electricity and carbon emission on thecorresponding day-ahead market and (2) the priceof industrial wood pellets (delivered month-aheadex-ship at Rotterdam).Biomass spreads do not include operation andmaintenance costs. However, the German spreadsinclude transport costs of shipping the pellets alongthe Rhine (Rotterdam – Cologne area).Specific calculation assumptions: conversion factorof 1 ton of standard wood pellet contains 4.86MWh of energy; generation efficiency of coal and biomass fired power plants equals 35%; the price ofcarbon emission is defined as the difference of theGerman dark and clean dark spreads, calculatedaccording to the methodology of Platts.
remained still on the negative side, prompting the non-profitability of suchkind of power generation without furthersupport measures.
Source : APX – Endex (wood pellets, industrial grade) ;
Platts (electricity and emission prices; freight rates)
On the weekly variable cost side the net
costs were moving downwards in a narrowrange of € 74-77/MWh on the Germanmarket between the beginning of April andthe last week of June 2010.
During the same period the combined priceof electricity and emission allowanceincreased significantly from € 48.5/MWhto € 62.6/MWh, which was mainly due tothe rise of base-load power prices.
In consequence of these marketdevelopments the biomass spread rosefrom € -25.4/MWh to € -12.4/MWh duringthe second quarter of 2010. Although thisis the second highest value since the
beginning of the observations (November2008), further positive developments oneither input-costs side or higher marketelectricity prices would be needed for the
biomass based power production to turn to
be profitable.
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The Netherlands
The average monthly traded volume ofday-ahead electricity contracts remainedstrong in the second quarter of 2010,reaching exactly the same value as in thefirst quarter of the year (2.6 TWh). Thisvalue is more than 28% of the grosselectricity consumption of the Netherlandsmeasured in April 2010.
Similarly to the German market both base-load and peak-load prices showed gradualincrease during the second quarter of 2010.Base-load monthly average prices rosefrom € 39.4/MWh to € 43.9/MWh betweenMarch and June while peak-load pricesmoved from € 44.6/MWh to € 52.2/MWhin the same period. Since the secondquarter of 2009 electricity prices on theDutch market followed an upward trend; in
June 2010 monthly average base-load prices were up by 44% while peak-load prices rose by 39.7 since having markedtheir several year lows in May 2009.
0 €/MWh
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100 €/MWh
120 €/MWh
0.0 TWh
0.5 TWh
1.0 TWh
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2.0 TWh
2.5 TWh
3.0 TWh
4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6
2007 2008 2009 2010
APX - Volume APX base price APX peak price
APX : NLMonthly volumes and prices
Source : Platts.
Weather conditions played an important
role in the evolution of power prices on theDutch market; in April the weather turnedout to be milder than usual but in May
HDD values were more than 50% higherthan the long term average. This colderweather prompted a higher residentialheating demand, pushing the power priceshigher.
The difference between German and Dutch base-load prices was fluctuating within anarrow band (+-€ 5/MWh) during most ofthe second quarter of 2010. On some days,
when wind power supply suddenly jumpedor dropped, this difference showed someextreme values.
-20 €/MWh
-15 €/MWh
-10 €/MWh
-5 €/MWh
0 €/MWh
5 €/MWh
10 €/MWh
01 Apr08 Apr15 Apr22 Apr29 Apr06 May14 May 22 May30 May06 Jun13 Jun20 Jun27 Jun
Baseload price differential betweenthe Ge rman and Dutch Day Ahead markets
Q2 2010
Source : Platts.
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France
After reaching a record high in December2009, monthly traded day-ahead volumesstarted to decrease gradually and fell below4 TWh in May 2010. Although in June2010 the volume of power trading pickedup again, the volume measured on EPEX
power exchange in the second quarter of2010 was still lower by 12% than that in
the first quarter of the year. This volumedrop in the second quarter corresponds tothe experiences of previous years and itmight be close relationship with theseasonality of the weather.
The monthly average of base-load day-ahead prices that stood at € 45/MWh inMarch 2010 moved downwards to anarrow range of € 41-42/MWh, signallingthe only market in Central Western Europe
(CWE) where average base-load priceswere lower in June than in March 2010.Monthly average peak-load prices alsodropped in April but until June theymanaged to catch up again to a level of €51/MWh.
0 €/MWh
20 €/MWh
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60 €/MWh
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120 €/MWh
0.0 TWh
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6.0 TWh
4 5 6 7 8 9 1 01112 1 2 3 4 5 6 7 8 9 1 01112 1 2 3 4 5 6 7 8 9 1 01112 1 2 3 4 5 6
2007 2008 2009 2010
EPEX FR - Volume EPEX FR - base price EPEX FR - peakprice
EPEX spot : FRMonthly volumes and prices
Source : Platts.
The relatively stable price level, despite planned outages and tighter wind powersupply might be explained by weather
conditions that differed from those ofGermany, Belgium and the Netherlands inthe second quarter of 2010.
In April 2010 the temperature was higherthan the long term average in France(HDDs were down by more than 20%,whereas in the other three countries HDDsdecreased only slightly), implying arelatively mild weather in France. The
weather in May turned less cold in Francethan in the other three countries (HDDswere up only by 28% whereas theyincreased by 40-50% in Belgium, Germanyand the Netherlands).
Source :RTE France
Data from the French TSO shows that bythe end of the second quarter of 2010 thedifference between forecasted and actualnuclear plant availability climbed to highranges. This lower-than-forecastedavailability did not manifest in highelectricity prices which may point to the
prior overestimation of the power load.
The relatively low price level of Francemarket compared to other regional marketscan also be traced on the rebound of netelectricity exports of the country that rose
to a two year high level in June, above5TWh from a close-to-equilibriumsituation at the beginning of 2010.
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Source : ENTSO-E Vista
Although the quarterly average of the pricedifference between the French and Germanday-ahead wholesale prices showed aminor French premium, by the end of thesecond quarter of 2010 the French marketwas traded at a discount compared toGermany as German prices showed agrowth in parallel with the stability ofFrench contracts.
-10 €/MWh
-5 €/MWh
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
01 Apr08 Apr15 Apr22 Apr29 Apr06 May14 May22 M ay30 May06 Jun13 Jun20 Jun27 Jun
Baseload price differen tial betwe enthe French and the German Day Ahead markets
Q2 2010
Source : Platts.
A similar situation could be observed in
the price level relation of the French andthe Dutch markets; while at the beginningof the quarter French prices were higher, atthe end of Q2 2010 they were
outperformed by the increase of Dutch prices
-10 €/MWh
-8 €/MWh
-6 €/MWh
-4 €/MWh
-2 €/MWh
0 €/MWh
2 €/MWh
4 €/MWh
6 €/MWh
8 €/MWh
01 Apr08 Apr 15 Apr22 Apr 29 Apr06 May13 May20 May27 May03 Jun10 Jun17 Jun2 4 Jun
Baseload price differential betweenthe French and the Dutch Day Ahead markets
Q2 2010
Source : Platts.
Belgium
In the second quarter of 2010 the monthlyaverage traded volume of day-ahead spotcontracts on the Belgian electricity marketswas slightly above 0.8 TWh, which could
be considered as a normal value since thelast three months of 2009. This tradedvolume represents about 11-12% of the
April 2010 monthly gross electricityconsumption of the country.
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0 €/MWh
20 €/MWh
40 €/MWh
60 €/MWh
80 €/MWh
100 €/MWh
120 €/MWh
0.0 TWh
0.2 TWh
0.4 TWh
0.6 TWh
0.8 TWh
1.0 TWh
1.2 TWh
1.4 TWh
1.6 TWh
4 5 6 7 8 9 10 121 2 3 4 5 6 7 8 9 10 121 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6
2007 2008 2009 2010
BPX - Vo lume BPX base price BPX peakpr ice
BPX : BEMonthly volumes and prices
Source : Platts.
Base-load monthly average prices movedin a very narrow range, increasing from €40.1/MWh measured in March to €42.5/MWh in June 2010. Peak-load pricesevolved in the same direction, gaining
about € 6/MWh during the second quarterof 2010. These price movements were broadly in line with the experiences on theGerman and Dutch markets that can beexplained by similar weather conditions(temperatures and HDD values comparedto their long term averages).
Price differences between French andBelgian day-ahead markets showed aminor premium of French prices that
disappeared at the end of Q2 2010 asFrench prices remained more stable andBelgian market prices crept higher.
-0.5 €/MWh
0.0 €/MWh
0.5 €/MWh
1.0 €/MWh
1.5 €/MWh
2.0 €/MWh
2.5 €/MWh
01 Apr0 8 Apr15 Apr 23 Apr30 Apr 07 May14 May21 May28 May04 Jun11 Jun18 Jun25 Jun
Baseload price differential be tweenthe Fre nch and the Belgian Day Ahead markets
Q2 2010
Source : Platts.
As the price increase in the Netherlandsoutperformed that of the Belgian market,the Dutch price premium turned to a firmdiscount by the end of the quarter.
-10 €/MWh
-8 €/MWh
-6 €/MWh
-4 €/MWh
-2 €/MWh
0 €/MWh
2 €/MWh
4 €/MWh
6 €/MWh
01 Apr0 8 Apr15 Apr 23 Apr30 Apr 07 May14 May21 May28 May04 Jun 11 Jun18 Jun25 Jun
Baseload price differential betweenthe Belgian and the Dutch Day Ahead markets
Q2 2010
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Austria
The monthly day-ahead traded volumecontinued to hit record high levels in June2010 on the Austrian EXAA powermarket, totalling 0.52 TWh. It seems thatthe increasing trend of traded volume that
began in the last months of 2008 is still onits way. This record-high value is still onlyabout 9% of the Austrian monthly gross
electricity consumption. This issignificantly lower than the respectivevalue on the German market, highlightingthat the majority of Austrian power tradingis carried out on the EPEX market.
0 €/MWh
20 €/MWh
40 €/MWh
60 €/MWh
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100 €/MWh
120 €/MWh
0.00 TWh
0.10 TWh
0.20 TWh
0.30 TWh
0.40 TWh
0.50 TWh
0.60 TWh
4 5 6 7 8 9 1 01112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6
2007 2008 2009 2010
E XAA V o lu m e E XAA b a se p ri ce E XA A pe ak pri ce
EXAA : ATMonthly volumes and prices
Source : Platts.
Monthly average price evolutions betweenMarch and June 2010 were quite similar tothose on German EPEX market for both
base-load and peak-load prices. Base-loadmonthly price level rose from € 39.4/MWhto € 43.1/MWh while that of the peak-loadwent up from € 45.2/MWh to € 51.5/MWh.
In Q2 2010 Austrian day-ahead wholesale prices were traded on an average small premium compared to the German market,
although there were some weekend dayswhen price difference widened
significantly. This proves a high degree ofcorrelation between these two markets.
-15 €/MWh
-10 €/MWh
-5 €/MWh
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
25 €/MWh
01 Apr 08 Apr 15 Apr 22 Apr 30 Apr 07 May14 May21 May28 May 04 Jun10 Jun16 Jun22 Jun28 Jun
Baseload price d ifferential betweenthe Austrian and the German Day Ahead markets
Q2 2010
Source : Platts.
Compared to earlier quarterly periods thedifference between the Austrian and theItalian day-ahead base-load contract was
oscillating in a narrower band (mostly inthe € 10-30/MWh range). The significant
price discount to the Italian benchmark prevailed; although on some days Austrian prices got quite close to those of the Italianmarket.
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
25 €/MWh
30 €/MWh
35 €/MWh
40 €/MWh
45 €/MWh
01 Apr 08 Apr15 Apr22 Apr 30 Apr07 May14 May21 May28 May04 Jun 11 Jun18 Jun25 Jun
Baseload price d ifferential betweenthe Italian and the Austrian Day Ahead markets
Q2 2010
Source : Platts.
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Northern Europe
The second quarter of 2010 has brought areturn of stability and normal conditions on
Nordic markets after the upheavalexperienced in Q1 triggered by harshweather conditions, low level of reservoircontents, tight grid margins and in some
periods reduced transmission capacity.
0 €/MWh
10 €/MWh
20 €/MWh
30 €/MWh
40 €/MWh
50 €/MWh
60 €/MWh
70 €/MWh
0 TWh
5 TWh
10 TWh
15 TWh
20 TWh
25 TWh
30 TWh
35 TWh
4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 1 01112 1 2 3 4 5 6
2007 2008 2009 2010
N or dp ool - Vo lu me Nord po ol - DA syst em b asel oa d p ri ce
Nordpool : NO, SE, FI, DKMonthly volumes and prices
Source : Platts.
After record high values registered inJanuary 2010 the average monthly volumereturned to a moderate range and reached21.6 TWh in the second quarter of 2010.This can be explained on one hand thestabilization of the market situation and on
the other hand by seasonal impacts as thenormal turnover is less during spring period (in Q2 2008 average monthlyvolume was 20.7 TWh while in Q2 2009 itreached only 20.4 TWh). The averagemonthly traded volume in Q2 was morethan 74% of the gross inland electricityconsumption of the concerned countrieswhich was an outstanding ratio comparedto other European markets. This also
perfectly reflects the high liquidity and the
developed nature of the Nordic powermarkets.
After the falling-out of bottleneck effectsin the beginning of the year prices returnedto their normal level in Q2 2010. Monthlyaverage prices dropped from € 57/MWhmeasured in March to € 43/MWh in Mayand they rose again in June to finish thequarter at a price level of € 44.8/MWh.The quarterly average price level was32.1% higher than that of the secondquarter of 2009.
In the second quarter of 2010 reservoircontent levels still exerted an upward
pressure on power prices, while they werestill below the median of the long termcapacity level7; although the differencediminished by the end of the observed
period.
Source : Nordpool
Weather conditions in the four countries
concerned did not show a universal picture.In Norway the weather in April and Maycorresponded more or less with the longterm average temperatures measured byHDDs, while in Sweden and in FinlandHDDs were down in both April and May,suggesting a milder weather this spring. Incontrast, Denmark's May HDD valueswere by 25% higher than the long termaverage, implying that the weather wascolder than usual.
7 Median of reservoir content capacity level ofyears between 1990 and 2006.
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The average price premium of the Nordpool market compared to Germanywas € 3.3/MWh in the second quarter of2010, though by the end of this period the
price premium began to turn to discountwhich used to be the normal situation inthe last couple of years with the exceptionof the first quarter of 2010.
The extremely high area price dispersionfrom the Nordpool base-load system pricethat dominated the first quarter of the year
practically disappeared and on monthlyaverage area prices did not showsignificant difference from the system
base-load price level.
In case of the daily average prices Swedishand Finnish prices were below the system
price level during the whole period, in
some periods (mainly on Sundays)showing severe drops. In contrast,
Norwegian daily averages were mostlyhigher than Nordpool system prices in thesecond quarter of 2010.
-50 €/MWh
-40 €/MWh
-30 €/MWh
-20 €/MWh
-10 €/MWh
0 €/MWh
10 €/MWh
20 €/MWh
4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 1011121 2 3 4 5 6 7 8 9 1011121 2 3 4 5 6
2007 2008 2009 2010
Price diff DK East - NP System Price diff DK West - NP System Price diff FI - NP System
Price diff NO avg - NP System Price diff SE - NP System
Area price differentials with respect tothe Nordpool baseload system price (vol wtd)
Source : Nordpool
As the following chart shows theextremely high price deviations of the
Norwegian area prices from the weightedaverage system price significantlydiminished in Q2 compared to the firstquarter of 2010. This is also signal of thenormalization of the situation of powersupply.
-15 €/MWh
-10 €/MWh
-5 €/MWh
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
0 1 / 0 4 / 2 0 1 0
0 4 / 0 4 / 2 0 1 0
0 7 / 0 4 / 2 0 1 0
1 0 / 0 4 / 2 0 1 0
1 3 / 0 4 / 2 0 1 0
1 6 / 0 4 / 2 0 1 0
1 9 / 0 4 / 2 0 1 0
2 2 / 0 4 / 2 0 1 0
2 5 / 0 4 / 2 0 1 0
2 8 / 0 4 / 2 0 1 0
0 1 / 0 5 / 2 0 1 0
0 4 / 0 5 / 2 0 1 0
0 7 / 0 5 / 2 0 1 0
1 0 / 0 5 / 2 0 1 0
1 3 / 0 5 / 2 0 1 0
1 6 / 0 5 / 2 0 1 0
1 9 / 0 5 / 2 0 1 0
2 2 / 0 5 / 2 0 1 0
2 5 / 0 5 / 2 0 1 0
2 8 / 0 5 / 2 0 1 0
3 1 / 0 5 / 2 0 1 0
0 3 / 0 6 / 2 0 1 0
0 6 / 0 6 / 2 0 1 0
0 9 / 0 6 / 2 0 1 0
1 2 / 0 6 / 2 0 1 0
1 5 / 0 6 / 2 0 1 0
1 8 / 0 6 / 2 0 1 0
2 1 / 0 6 / 2 0 1 0
2 4 / 0 6 / 2 0 1 0
2 7 / 0 6 / 2 0 1 0
3 0 / 0 6 / 2 0 1 0
Pri ce d if f N O M i ddl e - NO avg Pri ce di ff NO No rth - N O a vg
Price diff NO South East - NO avg Price diff NO South-SouthWest - NO avg
Price diff NO West-SouthWest - NO avg
Norwegian area pr ice differentials with respect tothe vol wtd avg Norwegian baseload price
Source : Nordpool
As a new development Nordpool launcheda new bidding area in Estonia and thus the
power market of this country has been
connected to Nordpool, offering thetrading possibility on a liquid powermarket.
The trading started on the 1st April 2010and daily average traded volume showed arapid growth during the second quarter of2010 (in April: 4.5GWh; May: 5.4GWh;June: 11.9GWh). However, the cumulatedmarket turnover during the second quarterwas less than 1% of the Estonian gross
inland electricity consumption; depicting
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Volume 3, I ssue 2 : Apr il 2010 – June 2010 ; page 14/33
the premature development phase of the power trading.
Source : Nordpool
The daily average price evolution of thefirst three trading months (Q2 2010)showed a strong co-movement of Estonianand Nordpool system base-load prices. Theaverage price discount of the Estonian
prices was € 8.5/MWh in this quarter andmoving ahead in time it seemed to havediminished. Estonian prices showedespecially high correlation with Finnisharea prices.
Apennine Peninsula
Italy
During the observed period the monthlytraded volume on the IPEX Italian powerexchange showed a relative stability as theheating season that is characterized by highmonthly values was over. The averagemonthly traded volume in the second
quarter of 2010 was 16.1 TWh which isnearly 4% less than that of Q2 2009 and12% less than the respective value of thesecond quarter of 2008. It seems thattraded volume data are on a decreasing
path since the middle of 2008.
0 €/MWh
20 €/MWh
40 €/MWh
60 €/MWh
80 €/MWh
100 €/MWh
120 €/MWh
140 €/MWh
0 TWh
5 TWh
10 TWh
15 TWh
20 TWh
25 TWh
4 5 6 7 8 9 1 01112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6
2007 2008 2009 2010
IP EX vo lu me IP EX DA sy stem pe akl oad pri c IP EX DA sy ste m b asel oad pri ce
IPEX : IT*Monthly volumes and prices
Source : Platts.
* Trade on Italian (IPEX) and Iberian (OMEL) electricity
markets is incentivised by regulatory means.
Both base-load and peak-load monthlyaverage prices moved in a very narrowrange (€ 59.3-61.3/MWh for the base-loadand € 67.3-70/MWh for the peak-load) andit is worth noting that monthly prices inJune were still lower than in March 2010,though the prices reached their localminimal value in May 2010.
Looking at the Italian regional pricedevelopments Sardinia and Sicily remainedthe two most volatile regions (physical
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Volume 3, I ssue 2 : Apr il 2010 – June 2010 ; page 15/33
natural zones), regarding the daily average prices.
The Sardinia and Sicily area hourly prices presented some examples for extreme pricemovements during the second quarter ofthe year. For example, between 6th and 8th April there were a few hours whenSardinia area prices exceeded € 200/MWh,and this also held true for Sicily area prices
for 17-18 June during the whole peakseason (between 0900 and 2200 hours). Onthe other hand, for example, on 22nd Junein the off-peak season prices of Sicily areawere less than € 10/MWh, giving a goodexample for the possible amplitude of pricefluctuations in these two areas.
The monthly average price data show thearea prices of Northern Italy continued tomove closely with the national prices while
both Sardinia and Sicily area prices kept adistance from the national prices as it wasthe case in the last couple of quarters. InMay and June Sicily prices climbed to theirlocal highs as some extremely high hourly
prices repeatedly appeared in the system.
0 €/MWh
20 €/MWh
40 €/MWh
60 €/MWh
80 €/MWh
100 €/MWh
120 €/MWh
140 €/MWh
160 €/MWh
4 5 6 7 8 9 1 01112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6
2007 2008 2009 2010
Nat ional price NORD SUD SARD SICI
IT GME : area prices (selected physical national zones)and purchansing price (end consumers)
Source : Gestore mercati energitici.
Italian base-load day-ahead prices weretraded on an average € 18.1/MWh
premium compared to those of the Frenchmarket in the second quarter of 2010. The
premium seems to have increased fromthat of the previous quarter as there weretwo trading days when the daily premiumwas above € 40/MWh.
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
25 €/MWh
30 €/MWh
35 €/MWh
40 €/MWh
45 €/MWh
01 Apr08 Apr1 5 Apr22 Apr 29 Apr06 May13 May20 May27 May03 Jun10 Jun17 Jun2 4 Jun
Baseload price differential betweenthe Italian and the French Day Ahead markets
Q2 2010
Source : Platts.
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Iberian Peninsula
Spain and Portugal
After the significant drop in monthly power prices measured in the first quarterof 2010 a sharp overturn could be observedin the second quarter. Base-load prices onthe Spanish market jumped from theirextremely low monthly average value of €
20.5/MWh measured in March to €40.6/MWh in June which was the highest
price since February 2009. It is worthmentioning that although the monthlyaverage prices reached their minimalvalues on both markets in March 2010, thedaily base-load prices fell to a range of € 2-3/MWh in the very first trading days ofApril which was the lowest price since1998.
0 €/MWh
10 €/MWh
20 €/MWh
30 €/MWh
40 €/MWh
50 €/MWh
60 €/MWh
70 €/MWh
80 €/MWh
0 TWh
5 TWh
10 TWh
15 TWh
20 TWh
25 TWh
4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 1 01112 1 2 3 4 5 6
2007 2008 2009 2010
Vol ume - PT Vol ume - ES Bsl - ES Bsl - PT
OM EL : ES, PT *Monthly volumes and p rices
Source : Platts.
* Trade on Italian (IPEX) and Iberian (OMEL) electricity markets
is incentivised by regulatory means.
Base-load prices on the Portuguese day-ahead market followed closely the Spanish
prices. However, an average discount ofless than € 1/MWh could be observed
compared to the Spanish market. Monthlytraded volume data were stable during thesecond quarter of 2010 on both markets (a
monthly average volume of 15.3 TWh forthe Spanish and a 2.5 TWh for thePortuguese market). These values werelower than those of the first quarter of2010, reflecting the usual seasonal patternand they were also below the volume dataof the second quarter of 2009; primarilyowing to the high base period monthlymeasured in June 2009.
Although the reservoir content of theSpanish hydro-electrical system remainedsignificantly higher than the long termaverage in the second quarter of the year,this could not exert a downward pressureon power prices in a similar magnitudethan in the first quarter of 2010. Therewere two reasons that might havecontributed to the increase in power prices.
First, during the entire second quarter both
wind level forecasts and currentobservations showed lower power supplyfrom wind energy and this exerted anupward pressure on electricity prices.Second, in Q2 of 2010 several maintenanceworks (planned outages) took place inSpain; and especially the fall-out of twonuclear plant units (Trillo and Asco II)reduced the available power supply.
Source :
Ministerio de Medio Ambiente, y Medio Rural y Marino,
Gobierno de España
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As the prices on the Spanish marketreturned to normal levels during the secondquarter of 2010, the extremely high pricediscount compared to the French market atthe beginning of April began to disappearand it even turned to a price premium inthe second half of May, though the pricediscount returned in the second half ofJune.
Source : Platts.
Central Eastern Europe
Poland
The monthly traded volumes on the Polishmarket were close to their record highvalues set in the first quarter of 2010,although in June a minor decreaseoccurred, probably in conjunction withseasonal impacts (beginning of the summer
season).
Source : Towarowa Gielda Energii S. A..
Both base-load and peak-load prices weresurprisingly stable, bearing in mind that
prices were going up in the second quarteron the major European markets. Monthlyaverage prices in June (both base-load and
peak-load) increased by only € 2-3/MWh
compared to March, while prices onGerman market that usually acts as a pricesetter for other Central European marketsrose by € 4-7/MWh during the same
period.
Poland assures the vast majority of itsgross inland consumption from domesticsources and solid fuels are predominant inits electricity mix. Surprisingly Polish
power pieces remained stable in spite of
soaring benchmark coal prices in thesecond quarter of 2010 (Coal CIF ARA
prices rose by more than 40% between
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March and June). Although in the past astrong correlation could be observed
between coal prices and Polish power prices, the current stability of electricity prices might be in relation with coal pricing different from CIF ARA (Polandhas significant domestic coal productionand imports the remaining part of itsconsumption mainly from Russia andformer Soviet states).
The other reason for power price stabilitymight be sought in currency exchange rates(Polish zloty showed a depreciation pathduring the second quarter of 2010; thismight also have contributed to keeping the
prices lower measured in euros).
2.52
2.54
2.56
2.58
2.60
2.62
2.64
2.66
01 Apr1 2 Apr 19 Apr2 6 Apr 03 May10 May17 May24 May31 May07 Jun14 Jun 21 Jun 28 Jun
Polish Zloty to Euro
Source : European Central Bank.
The next chart provides an evidence of theinter-connected nature of the German andthe Polish electricity market; base-load
price differentials fluctuated in a € +-5/MWh range during almost the wholesecond quarter of 2010.
At the end of the period the German premium edged higher, reflecting thestability of Polish prices and the increaseof those ones on the German market.
Increasing German price premiums arealso reflected in the reduced volume of
electricity flows from Germany to Poland:while in the first quarter of 2010 1.78 TWh
power was exported to Poland, this valuedropped to 1.07 TWh in the second quarterof the year.
-20 €/MWh
-15 €/MWh
-10 €/MWh
-5 €/MWh
0 €/MWh
5 €/MWh
10 €/MWh
01 Apr12 Apr19 Apr26 Apr03 May 11 May 19 May 27 May03 Jun10 Jun17 Jun24 Jun
Baseload price differential betwee nthe German and the Polish Day Ahead markets
Q2 2010
Source : Platts
Czech Republic and Slovakia
The monthly average volume on the Czechmarket in the second quarter of 2010remained close to its record high value setin the first quarter and reached about 0.36
TWh. On the Slovak
8
market the averagemonthly volume was even a bit higher inthe second quarter (0.2 TWh) than therespective value of the first quarter of2010.
8 In the Quarterly Report on European ElectricityMarkets January-March 2010 (Vol. 3 Issue 1)Slovak monthly peak-load prices were reported ascontaining weekend price quotations; in the currentreport the calculation method has been adjusted tothat of the Czech prices in order to enhanceconsistency.
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The average monthly combined tradedvolume of the two markets was 0.57 TWhin the second quarter of 2010, which wasabout 7-8% of the combined gross inlandelectricity consumption of the twocountries.
Source : Operátor trhu s elektrinou, a.s.
Monthly average base-load and peak-load prices on both markets were on an upward path during the second quarter of 2010.Base-load prices rose from € 38/MWh to €43/MWh between March and June on bothmarkets. The increase in both Czech andSlovak peak-load prices was faster (from €47/MWh to € 57/MWh) than that of the
base-load prices.
The faster increase in peak-load pricesmight have been in strong relationship withthe similar price movements on theGerman market as both Czech and Slovakmarkets closely follow the evolution ofGerman power prices.
-12 €/MWh
-10 €/MWh
-8 €/MWh
-6 €/MWh
-4 €/MWh
-2 €/MWh
0 €/MWh
2 €/MWh
4 €/MWh
6 €/MWh
8 €/MWh
10 €/MWh
01 Apr08 Apr15 Apr22 Apr29 Apr 07 May1 5 May23 May3 1 May07 Jun14 Jun21 Jun28 Jun
Baseload price differe ntial betwee nthe German and the Czech Day Ahead markets
Q2 2010
Source : Platts, Operátor trhu s elektrinou, a.s.
Although the averages of the German andCzech base-load day-ahead prices did notshow significant difference in the secondquarter of 2010 (DE - € 41.5/MWh vs. CZ- € 41.4/MWh); the chart above shows thatthe German price premium that could beobserved at the beginning of the quarterturned to a slight discount by the end ofJune.
This change of relation between the twocountries' price level is also reinforced bythe decrease of the volume of the Czech
export to Germany: while in the firstquarter the volume of the export exceeded2.8TWh, in the second quarter of 2010 thetotal export volume was just above1.5TWh.
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British Isles
UK
UK day-ahead base-load prices weresoaring during the second quarter of 2010.The monthly average base-load price,which was about € 38/MWh in March,gradually increased during this threemonths period and exceeded € 50/MWh in
June. This was the highest monthly valuesince February 2009.
0 €/MWh
20 €/MWh
40 €/MWh
60 €/MWh
80 €/MWh
100 €/MWh
120 €/MWh
140 €/MWh
0.00 TWh
0.02 TWh
0.04 TWh
0.06 TWh
0.08 TWh
0.10 TWh
0.12 TWh
0.14 TWh
0.16 TWh
0.18 TWh
0.20 TWh
4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6 7 8 9 101112 1 2 3 4 5 6
2007 2008 2009 2010
APX UK Vol ume UK DA Base_Platts Assmt
UK: APX UK Monthly volumes andOTC prices
UK values are quoted in € using the €/£ daily exchange rate as
reported by Platts.
Source : Platts.
The primary factor for the upward trend ofelectricity prices was the permanent
increase in price of the natural gas on theUK market. The correlation between the price evolutions of these two energy products became probably stronger than inthe previous quarter.
An other important factor might havecontributed to higher power prices was theapparently colder weather in May 2010compared to long term average, though inApril the weather was a bit milder thanusual. The beginning of this spring periodincurred some planned outages(maintenance works) of power plants and
lower supply of electricity. Monthlytraded volumes dropped to their lowestvalues in April and May during the lastthree years while in June they rebounded tothe value observed in the first quarter of2010.
-8 €/MWh
-6 €/MWh
-4 €/MWh
-2 €/MWh
0 €/MWh
2 €/MWh
4 €/MWh
6 €/MWh
8 €/MWh
10 €/MWh
01 Apr1 2 Apr19 Apr 26 Apr04 May11 May18 May26 May03 Jun1 0 Jun17 Jun2 4 Jun
Baseload price differential bet weenthe UK and the French Day Ahead markets
working days, Q2 2010
Source : Platts
Higher prices on the UK market were alsoreflected in the trend reversal of pricerelation between UK and FR market: sinceearly June power on the UK market istraded on a price premium compared to theFrench exchange; which defies thediscount observed in earlier periods.
Higher UK prices also exerted influence onthe direction of power flow between thesetwo markets: according to the data ofENTSO-Vista the net inflow reached 1.66TWh from the French market, while in thefirst quarter of 2010 the net outflow fromthe UK to France reached 1.5 TWh.
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-10 €/MWh
-5 €/MWh
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
01/Apr/10 14/Apr/10 23/Apr/10 05/May/10 14/May/10 25/May/10 04/Jun/10 15/Jun/10 24/Jun/10
UK cln sprkspot NL cln sprkspot
Evolution of the spot clean spark spre ads (50 %efficiency) during Q2 2010
UK values are quoted in € using the €/£ daily exchange rate as
reported by Platts
Source : Platts
The UK spot clean spark spread9 was fairlystable during the second quarter of 2010; itoscillated around € 10/MWh during mostof the observed period. In contrast, theDutch spot clean spark spread was more
volatile and with the exception of the firsttwo weeks of the quarter the spread valuewas below than that of the UK, primaryowing to lower electricity prices on theDutch market.
UK power prices followed the upwardtrend of fuel prices during this quarter andthus UK spark spread reached high values(more than € 7/MWh) by the end of thesecond quarter of 2010 that could only be
9 Spark spreads are indicative prices showing theaverage difference between the cost of gasdelivered on the gas transmission system and the power price. As such, they do not includeoperation, maintenance or transport costs. Thespark spreads are calculated for gas-fired plantswith standard efficiencies of 50% and 60%. Thisreport uses the 50% efficiency.Spreads are quoted for the UK, German andBenelux markets.Clean spark spreads are defined as the averagedifference between the cost of gas and emissions,and the equivalent price of electricity.
measured in the beginning of this year.(See chart on page 6).
South Eastern Europe
Romania
In contrast to most of the other observedEuropean power markets Romanian day-
ahead electricity prices followed adownward trend in the last couple ofmonths. Base-load price were 19% lowerin June 2010 compared to those of March;reaching an average of € 31/MWh whichwas the lowest level since November 2009.Peak-load prices also decreased by morethan 20% during the second quarter of2010; and the monthly average of €38/MWh observed in June 2010 was thelowest price since May 2009.
Source : S.C. OPCOM S.A.
This phenomenon was probably stronglycorrelated to the milder-than-usual weatherconditions and the overall performance ofthe economy. Heating degree day valueswere significantly lower in April and May(13% and 45%, respectively) than the longterm average. In the second quarter of
2010 GDP data still showed a -0.5%contraction of the economy compared to
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the Q2 2009 and this must have weighedon power demand.The average monthly traded volume onOPCOM market was 0.62 TWh thatrepresented 14% of the gross inlandelectricity consumption of Romania in thesecond quarter of 2010.
The price differential between Czech andRomanian base-load prices has
significantly widened during the secondquarter, as a consequence of divergent
price movements on the two markets. Bythe end of the observed period the Czech
price premium climbed to an eighteenmonths record high range of € 20-25/MWh.
-15 €/MWh
-10 €/MWh
-5 €/MWh
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
25 €/MWh
30 €/MWh
01 Apr08 Apr15 Apr22 Apr29 Apr 07 May1 5 May23 May 31 May07 Jun14 Jun21 Jun28 Jun
Baseload price differential betweenthe Czech and the Romanian Day Ahead markets
Q2 2010
Source : Operátor trhu s elektrinou, a.s., OPCOM s. a.
Greece
Both base-load and peak-load day ahead power prices showed a sudden jump inApril on the Greek market while in Mayand June they began to return to theirlevels closer to those of earlier months.
Source : Platts.
* Trade on the Greek mandatory pool (DESMIE) is incentivised
by regulatory means.
Average base-load prices peaked at €55/MWh in April while those of peak-loadwere above € 63/MWh; both numbersmark a fifteen month record high value.
This price evolution seemed to be strange bearing in mind that the weather wasextremely mild in this period in Greece (inApril the heating degree values were 38%
lower than the long-term average, prompting a significant demand reductionstemming from heating needs).
The Greek economy was still in recessionin the second quarter of 2010 (quarterlyGDP index showed a -3.8% contractioncompared to Q2 of 2009) and monthlyyear-on-year industrial production numberswere still on the negative side in Q2 2010.
The possible reason should be sought onthe supply side while according toEurostat's monthly electricity statistics data
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the total gross electricity generation(indigenous production) fell to an eleven-year-low value of 3.65 TWh. Thissignificant drop in domestic productionentailed a higher demand for power fromimport sources.
-20 €/MWh
-10 €/MWh
0 €/MWh
10 €/M Wh
20 €/M Wh
30 €/M Wh
40 €/M Wh
50 €/M Wh
01 Apr08 Apr15 Apr22 Apr29 Apr 07 May15 M ay23 May 31 May07 Jun14 Jun21 Jun28 Jun
Baseload price differential be tweenthe Italian and the Greek Day Ahead markets
Q2 2010
Source : IPEX, DESMIE.
Both base-load and peak-load prices beganto decrease in May and the monthlyaverage values in June 2010 were €42/MWh and € 52.5/MWh, respectively.Mild weather continued to weigh on theheating demand in the month of May
(HDD values were also lower), indigenous production picked up again and additional power demand did not arise in the lack ofeconomic rebound. These factors have allcontributed to the diminishing of power
prices in Greece.
The high power prices in April can also betraced on the discounts to the Italianmarket which was not a usual phenomenonin the last couple of months.
-30 €/MWh
-20 €/MWh
-10 €/MWh
0 €/MWh
10 €/M Wh
20 €/M Wh
30 €/M Wh
40 €/M Wh
50 €/M Wh
01 Apr08 Apr15 Apr22 Apr29 Apr 07 May15 May 23 May3 1 May07 Jun14 Jun21 Jun28 Jun
Baseload price differential betweenthe Greek and the Romanian Day Ahead markets
Q2 2010
Source : DESMIE , OPCOM s.a.
The price premium of the Greek marketcompared to the Romanian prices climbedto more than € 40/MWh at the beginningof the second quarter which happened lasttime in early 2009. The average pricedifference between the base-load prices ofthe two markets was € 12.7/MWh in thesecond quarter of 2010.
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A.1.2 Forward markets
The monthly averages of the selectedcommodities were in Q2 2010 stillshowing an increasing trend after the dropin the beginning of 2009. For example, theyear-ahead coal price CIF ARA increased
by 36 % since January 2009 whenexpressed in €/metric tonne. This increaseis not unexpected when taking into
consideration the Indian and Chinesedemand which strongly influence the worldcoal market (see also the "Focus on" topicin this issue).
0 €/bbl
20 €/bbl
40 €/bbl
60 €/bbl
80 €/bbl
100 €/bbl
120 €/bbl
140 €/bbl
0 €/MWh
5 €/MWh
10 €/MWh
15 €/MWh
20 €/MWh
25 €/MWh
30 €/MWh
35 €/MWh
40 €/MWh
45 €/MWh
1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6 7 8 9 10 12 1 2 3 4 5 6
2007 2008 2009 2010
Brent crude FM12 Coal PFC CIF ARA Y+1
NBP FY01
Average monthly year ahead prices of selecte d ene rgy commodities.Left scale : Oil (Brent, €/bbl) and Coal (CIF ARA, €/metric tonne) ;
Right scale : Gas (UK NBP, €/MWh)
Source : Platts.
The chart also shows that the developmentof the Brent and NBP year-ahead priceswere different, with Brent showing astronger increasing trend and the NBP
price being more volatile.
The quarterly average of Brent year-aheadappreciated by 13 % in Q2 2010 relative toQ1 2010, whereas the gas year-ahead rose
by 17 % in the same period. But on theyearly level (Q2 2010 vs. Q2 2009), Brentgained 35 % and gas dropped by 1 %. Thedecoupling of oil and gas prices observed
on the spot markets appears to be presenton the forward markets as well.
The increasing forward prices of energycommodities apparently influenced theyearly forward contracts for baseload
power in Q2 2010. An overall increase can be noted, especially in April. This wasrelated not only to higher fuel prices, but tomore expensive ETS CO2 allowances as
well.
However, in May a general drop inforward baseload prices took place. Thiscoincided with the falling equity indicesand the Eurozone debt crisis. The traderswere apparently concerned over theinfluence of the debt crisis on the powersector. Nevertheless, all observed curvesended the quarter at a higher level.
The price differentials show that thedifferential between the French and theDutch prices, which considerably increasedduring the previous quarter, decreased bythe end of Q2 2010. From € 5/MWh thedifferential dropped to under € 3/MWh.The differential between the German andthe Dutch prices narrowed as well, from
€ 2/MWh to € 0.1/MWh.
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Source : Platts.
The UK baseload price for winter2011/2012 grew constantly throughout the
quarter, although this trend slowed down inMay. It started the quarter at € 46/MWhand finished at € 64.8/MWh. Thisrepresented an increase of 40 %.
More notable was the steep drop of theBrent 12-month forward contract in mid-May. As already mentioned the marketsshowed concerns in May over the debttroubles in Europe, the depreciation of theEuro and a drop in equity indices. The verylow level of this contract, falling alsounder € 62/bbl, showed to be unsustainable
and the price soon rose back to above € 66/bbl.
Source : Platts.
The British spark spreads did not show a
considerable change ever since theydropped in September last year.
Nevertheless, a slight increase took placein Q2 2010. The average quarterly sparkspread for one month ahead increased by18 % relative to Q1 2010. For one quarterahead this increase was 8 % and for oneyear 11 %.
Source : Platts.
In April the carbon prices on the Europeanclimate exchange followed the general
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trend in increasing prices along with powerand energy commodities. In this month the
prices of emission allowances increased by20 % and more. As elsewhere the pricesdropped in May, but throughout the quartercontango10 was in general present in the
pricing of European forward contracts. Nordpool was an exception, where backwardation11 occurred in May andJune.
12.0 €/t CO2e
13.0 €/t CO2e
14.0 €/t CO2e
15.0 €/t CO2e
16.0 €/t CO2e
17.0 €/t CO2e
18.0 €/t CO2e
Apr/10 Apr/10 Apr/10 Apr/10 May/10 May/10 May/10 May/10 Jun/10 Jun/10 Jun/10 Jun/10 Jun/10
E CX 20 10 E CX 20 11 E CX 20 12
ETS Phase 2 Eur Emissions CO2 - European Climate Exchange
Source : Platts.
For all markets the decrease in the beginning of June relative to the beginningof May was visible. This was in line withfalling prices as seen in the other chartsabove which took place later in May.
10 A situation of contango arises when the closer tomaturity contract has a lower price than the contractwhich is longer to maturity on the forward curve.11 Backwardation occurs when the closer-to-maturity contract is priced higher than the contractwhich is longer to maturity.
Source : Platts.
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A.2 Retail markets
A.2.1 Prices by Member state
In this the net retail prices, i.e. withouttaxes, are presented for the lowestconsumer bands (up to 1000 kWh annuallyfor households and up to 20 MWh annuallyfor industry).
The chart shows that the highest net pricefor one kWh of electricity in the household
band Da was paid by Irish households,with an average of € 0.37/kWh. This wasalso the case in the second semester of2008, when the price stood at € 0.43/kWh.The lowest net price was paid by theBulgarian households, namely € 0.07/kWh,same as in the second semester of 2008.
Source : Eurostat
Range for annual consumption of : Household band Da : [0 kWh – 1.000 kWh] ;
Industry band I a : [0 MWh – 20 MWh]
Note. Data for Austria and Italy are not available
In the industry sector the highest net pricein the industry band Ia was paid inSlovakia (€ 0.22/kWh), while the secondhighest net price was paid in Luxembourg(less than € 0.19/kWh). Among the EUmember states the lowest net price was
paid by the Estonian industry (almost € 0.075/kWh).
When analysing the prices with all taxesincluded, the picture at the top and thelower end was almost unchanged. The
price in Ireland was the highest in thedomestic sector, and in Bulgaria thelowest. In Bulgaria the price was also thelowest in the industry sector, whileSlovakia ranked second after Italy (the dataon net price in Italy is not available).
Source : Eurostat Range for annual consumption of :
Household band Da : [0 kWh – 1.000 kWh] ;
Industry band I a : [0 MWh – 20 MWh]
Note. Data for Austria and the Netherlands are not available
The evolution of the price with all taxesincluded for households in the secondsemester of 2009 compared to the samesemester of 2008 was most dynamic inFrance where it dropped by 35 % (from
€ 0.23/kWh to € 0.15/kWh) and in Maltawhere it saw an increase of 79 % (from
€ 0.13/kWh to € 0.23/kWh). In bothcountries these changes are to a largeextent related to the changes in net prices.
In the industry sector the biggest decreasein the gross price within the same periodwas seen on Cyprus (-19 %) and the
biggest increase in Spain (29 %). Also inthis case the changes in gross prices canmostly be attributed to the changes in net
prices.
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A further look at the HEPI12 index showsthat the gross price for electricity increasedin the first semester of 2010 by the largest
percentage in Stockholm among theselected European capitals. However, thehighest average gross price in the samesemester was paid in Copenhagen(€ 0.28/kWh) and the lowest in Athens(€ 0.115/kWh).
Source: VaasaEtt
A.2.2 Cross–panel data on household
electricity prices
The ranking order of the households withthe annual consumption between 2.500 and5.000 kWh changed little when comparedto the second semester of 2008. Below theEU-27 average were predominantly stillthe new member states. However,Hungary, Luxembourg and Spain joinedthe group of countries with prices abovethe EU-27 average.
12 HEPI electricity price index was developed bythe Austrian energy market regulator E-control andVaasaEtt Global Energy Think Tank, providingmonthly information about the evolution of finalelectricity consumer prices in some selected capitalcities of EU countries.
Notes
1)Range for annual consumption of :
Household band Dc : [2.500 kWh – 5.000 kWh] ;
Industry band I c : [500 MWh – 2.000 MWh]
2) The purchasing power standards (PPS) data for all Member
States are provisional.
Source : Eurostat
Using the PPS13 correction the comparisondone for the same period shows somemajor changes in the ranking of somecountries. In Czech Republic the PPS price
of a kWh in the household group with alltaxes included was the 13th highest in2008s02, whereas in 2009s02 it wasalready the 6th highest one. Cyprus on theother hand, had in 2008s02 the secondhighest price, but in 2009s02 it had onlythe 11th highest price.
13 Purchasing power parities eliminate the effects ofthe differences in price levels between countries,thus allowing volume comparisons of GDPcomponents and comparisons of price levels. Theyshow how many units of currency A need to bespent in country A to obtain the same volume of a product or a basic heading or an aggregate that Xunits of currency B purchases in country B.
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Notes
1) Only EU Member States are taken into account
2) Positive values designate higher position in the price ranking
order, meaning that the given country's prices rose faster (or
decreased less) than the average of the EU-27, otherwise said
the given country became more expensive compared to the other
ones, as measured against the previous semester (second half of
2008)
Source : Eurostat
B. Building the internal market
for electricity: cross border flowsand trade
The total amount of monthly physicalflows reached 50.5 TWh in Q2 2010,which was 10 % less than in Q1 2010. Thisdecrease in Q2 followed the usual pattern,as physical flows reached their highestlevels in colder months. The flows werealso high in April (18.5 TWh), but in Maythey were already significantly lower (15.4
TWh). In June they reached 16.6 TWh.
EU cross border monthly physical flows by exporting country
0
5
10
15
20
25
A p r - 0 7
M a y - 0 7
J u n - 0 7
J u l - 0 7
A u g - 0 7
S e p - 0 7
O c t - 0 7
N o v - 0 7
D e c - 0 7
J a n - 0 8
F e b - 0 8
M a r - 0 8
A p r - 0 8
M a y - 0 8
J u n - 0 8
J u l - 0 8
A u g - 0 8
S e p - 0 8
O c t - 0 8
N o v - 0 8
D e c - 0 8
J a n - 0 9
F e b - 0 9
M a r - 0 9
A p r - 0 9
M a y - 0 9
J u n - 0 9
J u l - 0 9
A u g - 0 9
S e p - 0 9
O c t - 0 9
N o v - 0 9
D e c - 0 9
J a n - 1 0
F e b - 1 0
M a r - 1 0
A p r - 1 0
M a y - 1 0
J u n - 1 0
T W h
Source : ETSO
Note. Data for IE, MT and CY are missing. Data for EE, LT and
LV are available since September 2008. Data on physical flows
from and to LU is incorporated in LU's neighbouring countries :
DE, BE, FR. Data for a number of Member States is s till partial,
particularly for Member States in the South East European
Region.
Year-on-year the flows in Q2 2010 were9% higher than year before. The biggestincreases were registered in the UK,
Northern Europe and the Baltic countries.
However, compared to Q2 2008, the flowswere 2% lower in Q2 2010.
The overall EU balance of outgoing andincoming electricity flows was positive inQ2 2010. The highest net physical flowswere as usually registered in the CentralWestern Europe. The order of magnitudeof this region corresponded to the negative
balance of the Apennine peninsula. The balance of British islands turned negative
again, after being positive since September2009. On the other hand, the balance of
Northern Europe turned positive in Mayafter being negative since November 2009.In Central Eastern Europe the balance wasslightly negative in May, but otherwise itwas positive as it has been for most of the
period depicted in the chart below.
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Source : ETSO.
European countries are grouped in the following regions :
Central Western Europe DE, NL, FR, BE, AT, CH
Nordic SE, FI, DK, NO
Apennine peninsula IT
Iberian peninsula ES, PT
Central Eastern Europe PL, CZ, HU, SK
South Eastern Europe SI, GR, BG, RO, HR, AL,
FYROM, RS
British Isles UK
Baltic EE, LT, LV
The following map on commercial flowsshows some similarities with the twocharts above. The UK was a net importerin Q2 2010, and the bulk of the flows took
place in Central Western Europe. Italy wasa heavy net importer and as it seems
Norway did not yet recover from the drywinter and low hydro levels.
Note to the map:
Data for some countries are not available
(see the legend). Due to presentationconstraints the Northern European
countries and Cyprus cannot be included
on the map completely. Data on the
commercial flows concerning Romania,
Bulgaria and Serbia are not complete.
There is no data available on Kosovo
under UNSCR 12/4499. Data on flowsbetween Germany and Austria are
estimates. For the majority of the reported
borders, commercial flow data is netted on
hourly frequency. For the case of theCzech-Slovak border, gross commercial
values are given.
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C. " Focus on Steam Coal"
The Energy Statistics Manual of IEA and Eurostat define three main
groups of coal: hard coal, sub-bituminous coal and brown coal. Hard
coal, having gross calorific value above 23,865 kJ/kg, is further
divided into coking coal (used in production of coke for blast
furnaces), other bituminous coal and anthracite used for raising
steam, therefore referred to as steam coal.
The total world steam coal exports amounted to 676 Mt in 2008 (1.2 %less than in 2007). The leading exporter was Indonesia with 26 %
share of the world total, followed by Australia (17 %), Russia
(13 %), Colombia (11 %) and South Africa (9 %).
Steam coal is typically used in power production. Preliminary data
show that in 2009 86 % of the EU gross inland consumption of steam
coal was used for this purpose. This equals 208 million tonnes
(compared to 235 Mt in 2008).
In 2009 the EU imported 148 Mt of steam coal (160 Mt in 2008), and
as the chart below shows 74 % of it came from three countries:
Russia, Colombia and South Africa. The leading importers were theUnited Kingdom, Germany and the Netherlands.
Sources of EU steam coal imports and imports by the Member States
(Mt) in 2009Source: European Commission
The domestic production reached 109 Mt in 2009 (116 Mt in 2008).
This represented 45 % of the gross inland consumption and 86 % of it
was mined underground.
There are two important drivers influencing the prices and the
development of the international steam coal trade: the demand in
Asia and the volatility of freight rates. The following chart
presents the selected spot prices for steam coal.
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Spot wholesale prices for steam coalSource: Platts
In spite of the global economic downturn and falling prices, the
steam coal market did not experience the expected collapse in 2009.
This is primarily due to the increased imports by China and also
India. In 2009 first shipments of steam coal from Colombia and South
Africa to China took place and coal from South Africa is being
increasingly exported to India as well. Historically Colombia and
South Africa were delivering to the Atlantic markets. This led to astrong divergence between the Pacific and Atlantic markets, with
China becoming an important net importer, while the exports to the
EU and the USA stagnated. The weakness of the Atlantic area relative
to the Pacific area is demonstrated also by the fact, that the price
of coal delivered to Europe (ARA – Antwerp, Rotterdam, Amsterdam)
has in the last two years often been lower than the free-on-board
prices of coal in Newcastle (Australia) or Richard Bay (South
Africa) heading for Asian markets.
The obligation for Member States to report on the imports of hard
coal is laid down in the Council Regulation (EC) No. 405/2003 of 27
February 2003 concerning Community monitoring of imports of hardcoal originating in third countries. According to this regulation
any person or undertaking importing coal for power production or
production of coke needs to report to the Member State, which in
turn report to the European Commission.14
14 The reports can be found under the following link:http://ec.europa.eu/energy/observatory/coal/hard_coal_imports_en.htm